The difficulty of assessing funds to directly fund healthcare for the poor makes governments adopt user fee in the health system. Many studies have shown how user fee can
cause the poor to under utilize healthcare but not on how it can lead to the
waste of resources. The current study is theoretical
and it examines the efficiency of regulated user fee and the factors
affecting the efficiency. Efficiency focused mainly on the extent to which
resources are wasted as a result of regulated user fee. The results show that
the asymmetric information between the provider of healthcare and the patient
combined with the costliness of investigation by the government as well as the
costliness of revenue collection caused
three sources of waste: excessive treatment of the rich or the non-poor,
investigation and revenue collection.
Comparative statics were done to examine the effect of various factors
on the level of waste. The study then examined the conditions under with
regulated user fee is more efficient than direct financing of healthcare by the
government. Some recommendations were made to reduce wastes.

Mwabu, G. (1997) User charges for healthcare: A review of underlying theory and assumptions. Working Papers No. 127, World Institute for Development Economics Research.http://www.wider.unu.edu/publications/working-papers/previous/en_GB/wp-127/_files/82530852647738745/default/WP127.pdf